• The GBP/USD outlook points north as the pound rides on dollar weakness. 
• US data revealed only 73,000 new jobs in July.
• The Bank of England will likely cut rates on Thursday.

The GBP/USD outlook points north as the pound rides on dollar weakness. The greenback collapsed on Friday after a poor jobs report and downward revisions to previous readings. Meanwhile, market participants are preparing for a BoE rate cut on Thursday.

The dollar struggled after the US nonfarm payrolls report on Friday. According to data, there were only 73,000 new jobs in July, compared to the forecast of 106,000. At the same time, there were sharp downward revisions to the last two reports that further weighed on the dollar. The revisions showed that the labor market had deteriorated more than was thought. As a result, experts were predicting a Fed rate cut in September. 

“The report itself was perhaps not that weak, but the revisions were extremely significant,” said Mohamad Al-Saraf, FX strategist at Danske Bank.

“We have a hard time seeing how the Fed cannot lower rates at the September meeting.”

Meanwhile, the Bank of England will likely cut rates on Thursday to support the UK’s weak economy. However, the central bank must balance between weak growth and surging price pressures. Therefore, traders will focus on the tone during the meeting.
 

GBP/USD key events today

The pair will likely start the week slowly as there are no key events from the UK or the US.
 

GBP/USD technical outlook: Bullish engulfing candle
 

(Click on image to enlarge)

GBP/USD 4-hour chart
 

On the technical side, the GBP/USD price has rebounded to retest the 30-SMA resistance. However, since it remains on the lower side, bears are in the lead. At the same time, the RSI is slightly below 50, supporting bearish momentum. 

However, the downtrend paused when it got to the 1.3151 level. At the same time, the price formed a bullish engulfing candle, signaling a likely reversal. As a result, bulls are challenging the downtrend at the 30-SMA. 

A break above the SMA would show a shift in sentiment that could lead to a new uptrend. However, bulls would have to break above the 1.3402 resistance and start making higher highs and lows to confirm a new trend. On the other hand, if the SMA holds firm, the price will likely drop to retest the 1.3151 support.

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